THE liquidator of the Cork Medical Centre, a private hospital in Mahon, Co Cork, has issued proceedings against the VHI in a multi-million-euro claim for damages.

KPMG, the accountancy firm, is taking the case against the State insurance company on anti-competition grounds on behalf of creditors of the €90m hospital.

The hospital was developed by Sheehan Medical Ltd, a company owned by Joe Sheehan, a co-founder of the Blackrock Clinic, and his son James, but it ran into difficulty after six months' trading when VHI refused to cover it.

The new case, which was recently listed in the High Court for March 6, will seek to prove that the VHI forced the hospital out of business by refusing to deal with it.

Liquidator Kieran Wallace of KPMG has told creditors the case could return them substantial sums.

The Sheehans themselves are the biggest single creditor of the hospital, with debts of €3.5m out of the €5m in total which is owed to 100 unsecured creditors.

The case against the VHI could be a landmark, as other private hospital operators have also complained in the past about the difficulties of securing coverage from the country's biggest insurance provider.

The Cork Medical Centre, which employed 75 people and closed in September of 2011, had six operating theatres, 102 in-patient beds and planned to provide 550 jobs.

At the end of last year, the Mater Private Hospital said that it planned to re-open it sometime this year.